NEW YORK (MarketWatch) — The International Monetary Fund just confirmed that global economic growth is sputtering. The question is whether investors have already factored in the slowdown—given that the markets are currently aglow in red, our guess is perhaps not entirely.

However, there are those who make the case that much of the economic slowdown in Europe should already be factored the markets.

Jim McCormick, head of asset allocation research at Barclays, is one of those folks urging investors not to panic.

“This question is always a very tricky one to answer, but we’d argue that in aggregate, growth-linked asset prices may be pricing too much negativity for global growth in the coming months,” McCormick said in a note published Tuesday.

McCormick and his team have put together a basket of “growth-linked” assets, which include a mix of stocks, commodities and currencies. While McCormick isn’t urging investors to jump back into these growth-sensitive assets right now, he points to the chart above as evidence that they have fallen more than would be justified by underlying weakness in the global economy.

The chart below shows the top and bottom performers in the Barclays growth basket since its Sept. 4 peak. Indian equities, the S&P 500, corn futures, consumer discretionary stocks and Germany’s DAX index have held up best, while Chinese stocks, oil, the Australian dollar, Brazilian equities and platinum have fared worst.

Growing gloom

The IMF, citing weakness in Europe and a slower-than-expected Japanese recovery, again lowered its global growth forecast on Tuesday, now penciling in an expansion of 3.3% in 2014 and 3.8% in 2015. That slices 0.1 percentage point off the 2014 outlook and 0.2 percentage point off the 2015 forecast made in July.

The U.S. remains almost an island of strength in the developed world, while recovering emerging-market economies, with the exception of China, are seen continuing to fuel growth. The IMF upgraded its outlook for the U.S. this year, while Japan saw the biggest downgrade.

Taking a cue from weakness in Europe Tuesday morning, U.S. stocks fell, But for the most part, they’ve been more than insulated from the global slowdown.

The S&P 500
SPX, +0.01%
remains not far off its all-time high and is up around 5.4% since the beginning of the year. The pan-European Stoxx 600
SXXP, -0.82%
lags behind with a 0.8% gain, while Germany’s DAX
DAX, -0.29%
benchmark has slumped nearly 5%. Japan’s Nikkei 225 index
NIK, -0.60%
is off more than 3% since the start of the year.

What about the dollar?

Meanwhile, the relative strength of the U.S. economy and expectations the Federal Reserve will begin to hike interest rates in 2015 as the European Central Bank edges toward outright quantitative easing and the Bank of Japan remains in QE mode have sparked a sharp U.S. dollar rally.

McCormick notes that many of the inputs in the Barclays growth basket are typically quite sensitive to the value of the dollar, with most tending to fall as the dollar rises. As would be expected, some of the most sensitive — dollar-priced commodities such as oil and platinum — have been among the biggest underperformers in recent weeks, while consumer discretionary stocks and the DAX index have tended to benefit from dollar strength (and a weaker euro when it comes to German stocks).

A strong dollar won’t necessarily stand in the way of gains for growth-linked assets, McCormick writes, but he’s not urging investors to jump back into global growth trades just yet. A “better trend” in growth outside the U.S., particularly in China, remains a missing ingredient, he said.

“Admittedly, growth outside the U.S. has been hard to come by and the leading indicators are not especially encouraging…That said, we’d re-emphasize that a lot of bad news has now been priced into growth-linked assets, hence it won’t take much in terms of upside growth surprises to make a case for re-engaging in more pro-global-growth trades again,” McCormick said.

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